Question

Explain the critical view about the role of monetary policy. discuss ppt

Answer 1

Monetary policy consists of the actions by the Central Bank, currency board or any other regulatory committee, that determine the size and rate of growth of the money supply.

THE ROLES OF MONETARY POLICY.
1.Ensures an appropriate adjustment between demand and supply for money - it minimizes fluctuations in prices and general economic activity.

2.Price stability-it does this by using quantitative and qualitative instruments of credit control to limit inflation.

3.Credit control-it controls the uses of money and credit so that I vestibule resources flow into desirable channels.

4.Creation and expansion of financial institutions .

5.Debt management - it does this by controlling the rates of interest in a country.

Answer 2

Monetary economics gives an insight into how to craft an optimal monetary policy. A monetary policy is formed separately from fiscal policy. 

The role of monetary policy:

1. The monetary authority of a country such as the currency board or central bank control the supply of money.

2. The monetary policy ensures price stability and general trust in the currency by targeting an inflation rate or interest rate.

3. It helps in economic growth, in lowering unemployment and maintaining predictable exchange rates with other currencies.